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The rise of pop-up ventures

Pop-up restaurants and bars have increased in popularity in the last few years. A recent change to planning laws is likely to see this trend continuing as the need for the timely and costly process of obtaining consent for premises’ change of use has been relaxed. Pitmans LLP reviews the relevant legal considerations for operators seeking to start pop-up ventures.

Pop-up restaurants and bars involve the use of a temporary structure, a private home or parts of existing premises for a relatively short space of time offering the usual range of food and beverages that one would expect from a normal restaurant. They can be valuable for new businesses wishing to test the water and generate a marketing buzz to establish a new brand, whilst also providing an effective way for professionals to gain exposure of their skills in the field of hospitality as they seek investors and attention before opening a restaurant or another culinary concept. They are also used by established brands at festivals and at other significant outdoor events where large turn outs are expected.

Whilst they may be temporary in nature these restaurants and bars will nonetheless be regulated by the same regimes which apply to normal establishments. The following should generally be considered in each case:

Leasing the Premises:

Any letting, even on a temporary basis, does not remove the need to put in place a formal lease or licence which should address the flexible arrangement that has been agreed. If located on public space, the relevant Local Authority’s permission must be sought.

For landlords, a key requirement may be the need to recover the premises quickly to avoid losing a longer term commercial tenant and so the security of tenure provisions of the Landlord and Tenant Act 1954 will typically be excluded. For tenants, the importance lies in ensuring the premises can be fitted-out quickly and that the term or break clause caters for their plans for short-term occupation. Additionally, if the landlord’s interest is held on a head lease, the head lease may not permit a change of use. Freehold title covenants also should be checked for restrictions.

If pop-up restaurants or bars are to be located on the common parts of shopping centres or out of town retail parks there will need to be a thorough review of the leases of all other units to ensure that the landlord is entitled to do this. It will need to be checked whether there are any restrictions on the type of pop-up business, in addition to whether the landlord is entitled to keep rental income to itself or must credit it to a service charge fund.

Planning Consent:

The existing permitted use of the premises should be clarified and if, necessary, planning consent for the change of use to the relevant use class be obtained from the Local Authority.

The planning regime has previously hindered the letting process as obtaining permission for a change of use can be costly and time consuming. However, from 30 May 2013 this has been relaxed to allow for small flexible pop-up uses for a single period of up to 2 years for properties in use for retail, financial services, restaurants, pubs, takeaways, offices, leisure and assembly uses which will be able to change to retail, financial services, restaurants and cafes and offices. This means that tenants can more easily be secured quickly and on a temporary basis.

There is also no requirement for planning permission for any use of land, including any moveable structure, if the use does not continue for more than 28 days in any 12 month period. For this reason, many pop-up restaurants and bars deliberately only stay open for 28 days or less.

Licensing:

The sale of alcohol and hot food between 11pm and 5am or indeed any form of regulated entertainment will require licensing from the Local Authority. This would generally be in the form of a Temporary Event Notice.

General licensing laws will also apply. This means strict adherence to rules on selling alcohol. Penalties for breach can be high and run into thousands of pounds in terms of fines in the Magistrates Court. This means that properly trained staff must be used so that if something does go wrong, a due diligence defence is at least a possibility.

Health & Safety:

The usual rules in respect of carrying out risk assessments and training of staff apply and again, breach of the legislation can lead to very high fines in the Magistrates Court and indeed the Crown Court.

Food Safety:

Procedures for food safety will have to be in place in the same way as they would in a restaurant. This will identify the stages during the delivery, storage, cooking and service processes which carry risks associated with customers’ health. Staff again will have to be trained in this regard as penalties can once again be very high.

Insurance:

Traditionally insurance products for restaurants and bars have only been available on an annual basis, so short term tenants have to overpay or suffer cancellation penalties. However, specific pop-up insurance has emerged to provide comprehensive cover on a short term basis. Operators should, therefore, ensure that such cover is in place from the outset.

Conclusion:

The list of issues to be considered, although potentially less burdensome, will generally be consistent with those required for a permanent establishment. This means that the overheads for a fairly short period of time can be high and, therefore, should be carefully managed. As such, other than at festivals and similar events where the supply is restricted, these temporary structures are often used for generating PR rather than as a method of improving the profitability of a company.

The legal requirements for setting-up pop-up bars and restaurants will differ in every case as each pop-up venture will vary in its own innovative way. Legal advice should, therefore, be sought at the outset, particularly given the heavy nature of potential penalties. Pitmans LLP understands the complexities of setting up a pop-up venture and has had specific experience with the bespoke legal issues involved.

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